CHRISTIANSBURG - Too late to change the 3-cent hike in the real estate tax, the Montgomery County Board of Supervisors decided Tuesday to put 1 cent of that increase toward future tax relief for county residents.

Because of delays in Richmond, the county raised the real estate tax rate from 64 to 67 cents per $100 of property on April 26 without knowing the status of state funding to the county. The tax increase was designed to fund a $115.9 million proposed budget. Last Friday, County Administrator Clay Goodman sent a revised budget to the board of $118.2 million. The state allocated about $2.6 million more for schools in the county than the earlier budget anticipated. The increased state funding gave the school system enough money to fund a 7 percent pay increase even after Goodman cut $223,410 from county contributions to the schools.

On Tuesday the board instructed Goodman to cut 1 cent of the tax increase - or $458,000 in revenue - from the county's operating budget and place it in a special contingencies fund for real estate tax relief. The money could be used in lieu of a tax increase to fund future budgets. One cent of real estate tax translates into $18 for a person with a $180,000 home.

The board couldn't set a new tax rate for the upcoming fiscal year because the land books for the June collection have already been completed. Goodman explained that the board had the option of setting the funds aside to be used for future tax relief.

The board instructed Goodman to cut half of the $458,000 from the schoolsystem's $85.6 million budget and the other half from the $32.5 million allocated to the general fund. This will allow the school system to move ahead with its budget and teacher contracts while Goodman looks for places to cut from the general fund.

The board must finalize the budget by the end of June and Goodman anticipates that will happen at its June 14 meeting. He made no promises about where he'd find room for the $229,000 in cuts but said reducing employee pay raises would be a last resort.

"They are our greatest resources and we want to reward them," Goodman said about county staff. "But we'd like to reward our taxpayers."

Supervisors Mary Biggs, a teacher, and Annette Perkins, a retired teacher, both praised the state for providing additional funding for schools through a half-cent increase in the property tax.

"I'm just overwhelmed by it all and I'm really excited about it," Perkins said. "It's a real plus for our county to have this."

Far from being excited, Supervisor Steve Spradlin was bothered that the budget suddenly grew by more than $2 million.

"I don't see any relief we've given to our real estate owners," he said. "I don't think that's good policy and I think we need to be frugal with the money that we get."

Spradlin handed out a statement from the state legislature's Web site stating that localities should take the extra funding into account when setting real estate taxes. Supervisor Gary Creed made the motion to set money aside for tax relief. He pointed out a breakdown of the new state budget by the Virginia Association of Counties that referred to a portion of the state sales tax increase being designated for public education and local real estate property tax relief.

Creed, Doug Marrs, Jim Politis and John Muffo voted for the measure. Spradlin didn't vote for it because he said 1 cent of tax relief wasn't fair to county citizens. Biggs and Perkins voted against it because of concerns of what the cut would do to the county general fund. "I don't see any relief we've given to our real estate owners. I don't think that's good policy and I think we need to be frugal with the money that we get."

Steve Spradlin

Supervisor